Timing the market.
Discussion
So, Draghi didn't inject any hope into the Eurozone yesterday.. because he couldn't. And worse, he doesn't even know what Plan B is. A day as unexpected as it was unsettling and calamitous to many, and proof, if ever any was needed, that you don't try to time the market. Work out your strategy, refine it if you must, set out a course, be contingent.. but don't try to think you can outsmart the market. Define your objectives, put them on the fridge door, punch holes in your own case, differentiate between financial planning and investment management and work out how much time to spend on each. Timing the market successfully even once can be fatal, because it will make you think you're smart.
http://www.telegraph.co.uk/business/2016/09/08/ecb...
http://www.telegraph.co.uk/business/2016/09/08/ecb...
Simpo Two in the other thread said:
Just realised that maybe one reason why the markets are doing well is because interest rates are so low - making shares more attractive that perhaps they really deserve to be. Something has to go horribly wrong sometime, but I can't predict what or when. Which makes me as accurate as every financial pundit!
To my mind the whole "value of money" is in question.In my simple mind,
- If cash money you are holding has no investment value (interest rate zero)
- how can money which is lent to people have such high value? (20% p.a. interest on credit cards, >100% interest at Wonga)
My own version of "risk control" in this environment is to make sure you're not left holding a big pile of worthless cash money when the sky falls in! And I can't help thinking all of that debt out there is going to concertina into massive defaults at the same time. Clearly if the big banks are sucked down the plughole that would massive effects across everything. No wonder there's an asset bubble - at least if you own a "thing" (which includes shares) it will always have whatever fundamental value other people ascribe to it from time to time.
Some good points, and with one in particular in mind, when you look at data like this which emerged earlier this morning, which must be incredibly worrying for the Germans (and Greece!), it's as good a time as any to question your portfolio. Not to react needlessly, but to question if your circumstances are still the same as they were when you were all young and punchy, whether you now have to take as much risk, basically.. are your needs the same and are you the same person? Don't react to news, react to how your life changes - try and anticipate your needs.
https://www.destatis.de/EN/PressServices/Press/pr/...
https://www.destatis.de/EN/PressServices/Press/pr/...
You *could* be right 
.
I never react to news. I just sit there and chew it all over from every angle first. Then react. Chewing over, that's reacting though, right?
Edit; on reflection (damn there I go again), I would stand by that more than not. News is transient, we get overloaded with it, bombarded. Register it, assimilate it, but you don't always have to react. It is more important to know what the objectives are and to reflect properly first before reacting (if indeed, any action/reaction is needed). Maybe I've just got a much longer flash to bang time these days.
.I never react to news. I just sit there and chew it all over from every angle first. Then react. Chewing over, that's reacting though, right?
Edit; on reflection (damn there I go again), I would stand by that more than not. News is transient, we get overloaded with it, bombarded. Register it, assimilate it, but you don't always have to react. It is more important to know what the objectives are and to reflect properly first before reacting (if indeed, any action/reaction is needed). Maybe I've just got a much longer flash to bang time these days.
Edited by Ginge R on Friday 9th September 10:46
Ginge R said:
A day as unexpected as it was unsettling and calamitous to many, and proof, if ever any was needed, that you don't try to time the market.
Was it really that unsettling and calamitous? The global markets hardly sold off. There's nothing new there than whats been going on more or less since 08. There's been multiples rounds of qe all of the global markets are no where near inflation targets.
To a certain extent if your tracking the markets there's been signs that another wave of deflation might be coming for the last 3/4 weeks.
What's being going on since 08 is one massive experiment, I don't think any of the global central banks to an extent have any idea of how this ends and the markets currently are hooked on qe.
So qe1 didn't work lets l try qe2 etc, that doesn't work we'll try negative rates, of course that's not working so next well try helicopter money and maybe well think about buying actual stocks to try and keep this "bubble" propped up, ultimately they'll try anything for as long as possible until they lose control of the market.
You know the stock market cycles nothings changed, history tells you, you have boom and bust cycles it's human nature except this time the central banks are trying to avert it and personally in doing so they've made things ten times worse. It's all good while the music is playing no one cares the market is complacent, where's the next fix of qe, it doesn't matter if the market dips the central banks are there just blindly buy the dip it will be fine and you can't really argue against that strategy because it's simply been the best strategy since 08 but at some point that all ends one of those dips won't be the one you want to buy.
I'm adamant 20 years from now history will not look too kindly on what these guys are doing right now, it's almost blatant market manipulation.
twinturboz said:
Was it really that unsettling and calamitous? The global markets hardly sold off.
There's nothing new there than whats been going on more or less since 08. There's been multiples rounds of qe all of the global markets are no where near inflation targets.
To a certain extent if your tracking the markets there's been signs that another wave of deflation might be coming for the last 3/4 weeks.
What's being going on since 08 is one massive experiment, I don't think any of the global central banks to an extent have any idea of how this ends and the markets currently are hooked on qe.
So qe1 didn't work lets l try qe2 etc, that doesn't work we'll try negative rates, of course that's not working so next well try helicopter money and maybe well think about buying actual stocks to try and keep this "bubble" propped up, ultimately they'll try anything for as long as possible until they lose control of the market.
You know the stock market cycles nothings changed, history tells you, you have boom and bust cycles it's human nature except this time the central banks are trying to avert it and personally in doing so they've made things ten times worse. It's all good while the music is playing no one cares the market is complacent, where's the next fix of qe, it doesn't matter if the market dips the central banks are there just blindly buy the dip it will be fine and you can't really argue against that strategy because it's simply been the best strategy since 08 but at some point that all ends one of those dips won't be the one you want to buy.
I'm adamant 20 years from now history will not look too kindly on what these guys are doing right now, it's almost blatant market manipulation.
There doesn't have to be a sell off for it to be calamitous, although we are seeing some of that today. The cupboard is, in effect, bare. Monetary policy and centralised influencing may have gone as far as they can, and I agree with much of what you say. It's going to be a very interesting, and for many, an unsettling six months. My money remains on there being a bit of a serious house price fall, just as well I didn't buy that small place last year. There's nothing new there than whats been going on more or less since 08. There's been multiples rounds of qe all of the global markets are no where near inflation targets.
To a certain extent if your tracking the markets there's been signs that another wave of deflation might be coming for the last 3/4 weeks.
What's being going on since 08 is one massive experiment, I don't think any of the global central banks to an extent have any idea of how this ends and the markets currently are hooked on qe.
So qe1 didn't work lets l try qe2 etc, that doesn't work we'll try negative rates, of course that's not working so next well try helicopter money and maybe well think about buying actual stocks to try and keep this "bubble" propped up, ultimately they'll try anything for as long as possible until they lose control of the market.
You know the stock market cycles nothings changed, history tells you, you have boom and bust cycles it's human nature except this time the central banks are trying to avert it and personally in doing so they've made things ten times worse. It's all good while the music is playing no one cares the market is complacent, where's the next fix of qe, it doesn't matter if the market dips the central banks are there just blindly buy the dip it will be fine and you can't really argue against that strategy because it's simply been the best strategy since 08 but at some point that all ends one of those dips won't be the one you want to buy.
I'm adamant 20 years from now history will not look too kindly on what these guys are doing right now, it's almost blatant market manipulation.
In motoring terms we are on a long sweeping bend in forth and we should be in third.
1% is not a disaster, it's spoiled my weekend, but that's all, unless my wife asks me "how we doing"
Monetary policy: we have to raise rates so we can lower them later (if we need to)
Draghi appearing on TV is detrimental even with sound muted the outcome is predictable.
So I thought "ignore the news" was appropriate.
I agree on the UK housing market, as the family home, it should not be part of ones investment strategy, hardly a liquid asset.
Include on any NAV calcs though.
Any increased P & I, will damage a lot of households and possibly put a lot of BTLs back on the market.
Opportunity or disaster!
Best defense, run all the "what ifs", diversify against single country risk, even your own.
Drink lots and lots of beer, I find it really helps.
1% is not a disaster, it's spoiled my weekend, but that's all, unless my wife asks me "how we doing"
Monetary policy: we have to raise rates so we can lower them later (if we need to)
Draghi appearing on TV is detrimental even with sound muted the outcome is predictable.
So I thought "ignore the news" was appropriate.
I agree on the UK housing market, as the family home, it should not be part of ones investment strategy, hardly a liquid asset.
Include on any NAV calcs though.
Any increased P & I, will damage a lot of households and possibly put a lot of BTLs back on the market.
Opportunity or disaster!
Best defense, run all the "what ifs", diversify against single country risk, even your own.
Drink lots and lots of beer, I find it really helps.
jeff m2 said:
Best defense, run all the "what ifs", diversify against single country risk, even your own.
It's an interesting idea. Bet on every horse on the race and you have to win, right? Then you find out that all the probabilities add up to more than 1.0...But there's one thing I'm convinced of. In every disaster, someone is making money.
@klmhcp, I'd oblige but you're not receiving e-mails.
bmwmike said:
Lovely drop today on US markets
If Trump gets in it'll be 'interesting'. The domestic squabble over Brexit will seem like childsplay in comparison. But hey, we have our long term strategies all fixed up so we can sit in our shelters and hope. Wouldn't want to actually do anything because that would be 'timing the market'!Ginge R said:
There doesn't have to be a sell off for it to be calamitous, although we are seeing some of that today. The cupboard is, in effect, bare. Monetary policy and centralised influencing may have gone as far as they can, and I agree with much of what you say. It's going to be a very interesting, and for many, an unsettling six months. My money remains on there being a bit of a serious house price fall, just as well I didn't buy that small place last year.
I take back my comments, the effect the above had on global yield rates yesterday is significant. The Fed may have no choice but to hike in September. Ironically your post could well have marked a short term top. Didn't it ever? It's been on the radar now for a month or so, but I was expecting some nod or assurance that QE beyond March would (or may) continue.
I think the Draghi speech which precipitated my post yesterday is going to be a defining moment. It's an acceptance that measures are doing nothing to generate sustainable growth - worrying too, that this wasn't just sovereign debt stimulus that seems to have been stopped, but also corporate debt. The ECB is trying to suggest that it wants it wants interest rates to remain low, but in no uncertain terms it's also making it clear that it will not extend QE beyond March.
Interestingly, he said they didn't even *discuss* the extension. They could have said they might/may, but they didn't.. it wasn't even considered. Just divulging that was probably intended just to give a Heads Up to the market, which it certainly did, and hence what turned out to be the big sell off. Draghi's news was based too, on that export news from Merkel that I posted yesterday. She can't afford it either. So, given..
A) Yields are likely to be affected (the big sell off yesterday was mainly with those higher yield income producers)
B) S&P 500 is currently running a Schiller/PE multiple of c.25 X
C) Vanguard Life Strategy is popular and heavily biased towards the US
.. it's going to be a very absorbing and worrying few months (I think). I was going to sell my US trackers *anyway* (not suggesting anyone else should, it's just right for my strategy), so the timing is fortuitous. Charlie Bean, a wheel at the Bank of England, gave an interesting speech yesterday too, which suggested we shouldn't pay too much attention to central bank economic forecasts.
I think the Draghi speech which precipitated my post yesterday is going to be a defining moment. It's an acceptance that measures are doing nothing to generate sustainable growth - worrying too, that this wasn't just sovereign debt stimulus that seems to have been stopped, but also corporate debt. The ECB is trying to suggest that it wants it wants interest rates to remain low, but in no uncertain terms it's also making it clear that it will not extend QE beyond March.
Interestingly, he said they didn't even *discuss* the extension. They could have said they might/may, but they didn't.. it wasn't even considered. Just divulging that was probably intended just to give a Heads Up to the market, which it certainly did, and hence what turned out to be the big sell off. Draghi's news was based too, on that export news from Merkel that I posted yesterday. She can't afford it either. So, given..
A) Yields are likely to be affected (the big sell off yesterday was mainly with those higher yield income producers)
B) S&P 500 is currently running a Schiller/PE multiple of c.25 X
C) Vanguard Life Strategy is popular and heavily biased towards the US
.. it's going to be a very absorbing and worrying few months (I think). I was going to sell my US trackers *anyway* (not suggesting anyone else should, it's just right for my strategy), so the timing is fortuitous. Charlie Bean, a wheel at the Bank of England, gave an interesting speech yesterday too, which suggested we shouldn't pay too much attention to central bank economic forecasts.
bmwmike said:
"Yields are likely to be affected" do you mean div yields and if so, can you help me understand why ?
If a share is trading for £1 and paying a dividend of 10p p.a. that's a 10% yield.If the share price falls to 90p and the dividend stays the same the yield has gone UP. (by about 10%)
If the share price rises to £1.10p and the dividend stays the same the yield has gone DOWN. (by about 10%)
OzOs
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